Although nano-credit does not exist legally, as does microcredit, this figure is growing rapidly hand in hand with the fintech world and becomes the option to pay the urgent needs of people, especially those who do not have access to traditional financial channels.
In Colombia, there are already 40 entities that are dedicated to this type of loan, which range from $50,000 to $500,000. Although they offer an interest rate that can go up to the limit stipulated by the Financial Superintendence, they also pretend to be an alternative to the badly named ‘drop by drop’ credit.
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Fintech companies use AI to determine possible risks of non-payment
Erick Rincon, president of Colombia Fintech and the Fintech Iberoamerica Alliance said that nano-credit is a way to commercially mention low-cost consumer loans. In addition, he pointed out that the average digital credit placement for individuals is $300,000 and these resources “people ask for them to pay for public services or small obligations.”
In addition, he considers that this modality “is also a phenomenon of inclusion since it is not a matter of traditional financial actors.” Informal people or independent professionals whose income has been reduced find liquidity in nano-credit.
Fintech companies dedicated to lending small amounts are leveraged with their own resources in the early stages and then, as it has happened in many successful cases, they obtain financing from investment funds or venture capital. In addition, these entities are supervised by the Superintendence of Industry and Commerce.
In terms of risk analysis, these fintech companies take advantage of their strength in the analysis of big data and, in addition, many already use Artificial Intelligence (AI) and machine learning tools to determine potential risks of non-payment. In addition, they use several contract information and consultation packages from the large risk centers, said Rincón.
One of the entities that have emerged to offer nano-loans is Capital Pocket, a mobile wallet with several transactional services to promote the use of digital financial channels and AM Capital arm.
The rate of non-compliance is low
The application, which is 100% digital, also allows monetizing points in direct sales incentive plans, transfers balances between users, makes national and soon international transfers, reserves funds between users for a target (vacation), payment of public services, mobile recharges, recharging of mobility cards, personal cards for electronic and physical purchases and withdrawals from ATMs and payments through QR code, says Alexis Aronategui, Director of Capital Pocket.
The executive pointed out that people with limited resources comply with payments and the rate of non-compliance is low, between 2% and 4%. He announced that with AM Capital the objective is to turn him into a neo-bank and bring him closer to Capital Pocket.
The goals are ambitious since they aspire to have some 15 million users throughout the country who will be positively impacted with nano-credits.
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First published in Portafolio, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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